One of the crucial parts of your salary is your house rent allowance (HRA). All employers are required to offer HRA as reimbursement for housing expenses. The majority of us are unaware that we can also save tax on it, though. The employee's wage structure, actual salary, and the city in which he or she resides are taken into consideration when determining the HRA amount. Our HRA calculator can help you determine your tax obligation if you are a salaried worker renting an apartment.
What is an HRA Calculator?
Over the past ten or so years, the cost of living has increased significantly in the majority of Indian cities. Along with inflation, one factor contributing to this is a rise in disposable income. Many companies offer House Rent Allowances, or HRAs, to workers who rent homes in order to secure their welfare. You can figure out how much you get as an allowance with this HRA calculator.
The HRA slabs in India have undergone significant alteration as a result of the 7th Pay Commission's recommendations. Cities have now been divided into three separate slabs. The most metropolitan cities in Slab X are those where an HRA exemption calculator is obviously necessary. Minorly affordable cities are covered by Slab Y.
How does the HRA calculator help you?
Those who receive a housing rental allowance from their job can greatly benefit from using an online HRA calculator.
Under HRA, you can request an exemption under three circumstances.
- You must be paid a salary, and the HRA must be included in that compensation. If you are a self-employed person, you are not permitted to use this calculator.
- Second, you have to live in rented space.
- Finally, the HRA must be greater than 10% of your pay.
To determine how much tax you must pay on your HRA, utilise the HRA calculator we offer. Here are a few additional benefits:
- You can submit an HRA claim using the computed amounts based on the city in which you reside. Cities in Slab X are more expensive to live in than cities in Slab Y and Z.
- Calculating your annual tax obligation with the help of the dwelling rent allowance exemption calculator.
- The city you reside in will also affect your HRA slab. For instance, the HRA allowance might increase to 27% if you reside in Calcutta, Ahmedabad, Mumbai, New Delhi, or Chennai. The percentage may drop to 18% and 9% for tier-2 and tier-3 cities.
- Using our HRA calculator, you can quickly make plans for the future based on the percentage of your salary that is designated as HRA.
How to Calculate HRA in India?
The entire House Rent Allowance that must be paid is calculated by StockGro using a standard formula. Salary is the basic amount plus the Dearness Allowance and any other variable commissions for calculating HRA.
Our product is a first-rate tool for calculating HRA tax benefits. The lowest of the three primary heads below will actually serve as the exemption cap.
- The total (real) rent paid less 10% of each person's basic pay.
- The entire amount (gross) of HRA that the company gives the worker.
- 40 to 50% of the base wage, depending on how expensive the living conditions are.
To determine the HRA payable, we can use the fictitious Person A as an example. The following is his pay structure breakdown based on our HRA calculator if we assume that he resides in Delhi in accommodations for which he must pay Rs 12,000 per month.
|Salary Component||Total Amount [Each month]|
|Basic salary||Rs 23,000|
|Conveyance allowance||Rs 3000|
|Medical allowance||Rs 1250|
|Special allowance under other heads||Rs 2300|
By combining the elements, we determine that Individual A earns Rs 44,500 per month in compensation.
Using our HRA allowance calculator, the following numbers are generated based on the three heads listed above:
- Actual rent paid less the employer's 10% basic wage, or Rs. 9700, equals Rs. 15000.
- 50% of the base pay is equal to Rs. 11,500.
- Individual A must pay Rs. 9700 as HRA because the lowest of these three amounts is used to compute HRA.
It won't count towards his taxable income.
How to Use the HRA Calculator?
When you know the procedures, using our HRA calculator is simple.
Step 1: Enter your basic salary and any HRA that you receive according to your pay stub.
Step 2: Enter the actual rent paid and select the toggle whether you reside in a metro area or not.
Employees can easily reduce their tax burden thanks to the HRA income tax calculation.
Using an HRA calculator has advantages
The following are the main benefits of using a reputable HRA calculator in India:
- The calculator is error-free. It is available for as many uses as you choose.
- Based on the calculations, you can request tax exemptions.
- Finally, the calculator handles each variable that is involved in the HRA calculation.
HRA Calculator FAQs
To calculate your HRA, enter your basic salary, dearness allowance, total rent paid, HRA received, and city of residence in the HRA calculator. If you live in a metro city, select the "metro city" option. Then, click on "Calculate" to receive the result.
Calculating HRA using a salary calculator involves entering details mentioned in the previous answer. The calculator then computes the HRA amount, usually as a percentage of your basic salary.
The percentage of your salary that you can receive as HRA is based on the specific rules and regulations of your company or organisation, as well as the city classification as per government norms. Living in a metro city may qualify you for a higher amount.
In India, the amount of HRA that is exempted from taxes is determined based on certain conditions outlined in Section 10(13A)
of the Income Tax Act. These conditions state that the least of the following factors will be considered for HRA exemption:
- The actual HRA received from your employer.
- 50% of your basic salary if you reside in a metro city, or 40% of your basic salary if you live in a non-metro city.
- Actual rent paid minus 10% of your salary.
One can claim tax exemption for the full amount of HRA received as long as they meet all the conditions required to claim such relief.
If an individual receives HRA that is less than Rs. 1 lakh in India, the exemption on HRA will be based on the lowest of the three factors mentioned in the fourth question.
Individuals in India can claim HRA without rent receipts if their HRA is up to Rs. 3,000 per month. However, if the HRA exceeds Rs. 3,000, rent receipts must be presented to claim HRA.
To claim HRA exemption in India, you must meet the following three conditions:
- You should be a salaried employee. Self-employed individuals are not eligible for this exemption.
- You must receive HRA as a part of your salary package or CTC.
- You must be living in rented accommodation and actually paying rent. No tax benefit is available if you live in a self-owned house.
If you do not receive HRA from your employer, you can still reduce your tax liability by claiming a deduction under Section 80GG if you are paying rent for a residential accommodation.
Yes, an individual can claim HRA by paying rent to their parents if they own the property and have a rental agreement executed between the individual and the landlord (in this case, the parents). Additionally, the parents must declare this rental income in their income tax returns.
You can claim both HRA and home loans for tax benefits in India. If you're paying rent for a different city's house, you can get an HRA tax exemption and a tax deduction for the home loan repayment. Proof may be required to confirm that the house is far from the workplace.
To claim HRA, it is necessary to have a rental agreement. However, some employers may allow HRA claims without a rental agreement. The employer should either receive a rental agreement or rent receipts.
A wife can pay rent to her husband to claim HRA, provided that the husband owns the property, pays tax on the rental income, and the wife can provide proof of paying reasonable rent to her husband.